As the year and the decade changes

Friends,

It’s been a decade that started with fear, uncertainty and doubt and seems to be ending that way again for the Indian IT and Business Services Sector. But the industry proved the pessimists wrong then by moving up the value chain and enabling multi process outsourcing through innovative processes with the result that the first eight years saw all significant players report CAGRs of over twenty percent plus. The downturn which began over eighteen months ago has seen the inevitable decline in growth numbers and it is to the credit of the industry that growth has continued in both revenues and profits, albeit at a slower clip!

As global economies limp back to positive GDP growth and the high unemployment percentages in the West continue to create protectionist voices that work against outsourcing to other countries, the industry will continue to face the twin pressures of low incremental demand on one hand and persistent demand for more for less higher output from the same offshore resource base and reduced prices while volumes remain near stagnant.

To attain and sustain the level of growth that we have seen in the past, the imperatives for the industry are broadly in three areas- First is the need to explore innovative business models to move from the linear model and dependence on constantly increasing manpower. Investments in intellectual property and hosted applications and platforms and transformed processes where global centres around the world can be seamlessly integrated to deliver value are needed. In addition, revisiting revenue and gain sharing arrangements with customers and charging premium for expertise and result guarantees while developing deeper trust based relationships with customers will enable more sticky relationships to evolve. Second, the services portfolio will have to come under a microscope as a major share of new opportunities will come from new markets where wage arbitrage is not the key driver and a much more consulting led approach will be required to find real solutions to complex business and technology issues. New industry segments like public services, healthcare and education will need integrated solutions to be developed and high end segments like industrial design and clinical research outsourcing will need more investments by incumbent and new players in the industry.

The third and possibly the most significant challenge will be to reduce the industry concentration in the top seven cities which are already bursting at the seams and unable to cope with the pressures on physical, digital and social infrastructure and develop skilled resources all over the country. Industry has to see itself as part of a skills eco-system which enables robust partnerships with academic institutions and Governments at the State and Central levels to build technology enabled learning infrastructures that include young aspirants in every part of the country in the larger talent building effort.

Though the coming year might lead to slower growth in terms of revenues and profits, it will be about with opportunities for all. Let us dream of even bigger dreams for the future and another decade of astounding growth for the industry!
Ganesh

Industry Outlook

BEGINNING OF THE END ?

NASSCOM announces a 16 % growth for 2008-09 and a single digit growth outlook for the current fiscal year and almost inevitably, predictions of doom have started for the Indian IT sector. Nothing could be further from the truth - it is a tough year for all sectors and all countries folks, but mark my words - the double digit growth will be restored in 2010 and we are still well on track to meet a 100 Billion Dollar goal by 2015.

Not that there are no concern areas - jobs are scarce for the lakhs of young people graduating this year from engineering and IT streams and the situation may improve only marginally next year. Find a good finishing school for technical and soft skills and use the waiting time productively. Your career will be the better for it.

Ganesh

Talent Valley in J&K

Friends

It all began a few months ago when a chance meeting with the young and dynamic Chief Minister Omar Abdullah and understanding his vision of building high quality resources in the state encouraged us to put together a small NASSCOM delegation to visit the state. The speed of progress ‘ in talent assessment, training needs analysis for a range of services sectors including IT and the development of a new technology architecture which would support learner centric education by connecting campuses, content specialists and the student community in the valley would not have been possible if the Chief Minister had not led from the front, brought in dynamic leaders like the Chairman of J&K Bank, the Vice Chancellor of the University of Kashmir and the head of the Education Multimedia Research Center to work with the private sector participants of the delegation in a spirit of true Government ‘ Industry-Academia ‘Financial Institution collaboration for the benefit of Kashmiri youth.

With this duality of thinking ‘ a feeling of security brought in by the army but still a sense of disquiet and concern on their omnipresence, it is hardly surprising that the recent rape and murder of two young women should bring forth such a torrent of protests. Which is what makes it all the more creditable that a real effort is being made by all the participants of the Talent Valley program to bring in a new climate of hope and a positive view of the future for so many thousands of young members of the community. Here is a fervent appeal to all of you who have the larger interest of the nation at heart. Let us help young graduates with employable skills from the hill states and disadvantaged communities to find their place in the sun and march proudly with the rest of the industry as the IT and BPO boom revives and the growth processes are resumed across the country.

Ganesh